The financial institutions are also known as ‘Development Banks’. Development banks are those financial institutions, which provide term finance, promote entrepreneur, and enhance organizational effectiveness and upgrade know-how and dohow. They provide either loan or equity capital or both, as also advisory, promotional and entrepreneurial services. The first development bank was the Industrial Development Bank of Japan established in 1902. Initially, it provided ship mortgage loans. After 1927, it started financing small-scale industries. But it was after the Second World War, it started functioning as a development bank in the modern sense of the term. Development Banks were also started in a number of developed and developing countries in the post-war era. The Asian Development Bank came into existence in 1967. The first development bank in India was the Industrial Finance Corporation (IFC) established in 1946.

There are three types of development banks in India. Firstly, there are Development Banks for agriculture at local, state and national level. They are Primary Land Development Banks, state / Central Land Development Banks and NABARD. Secondly, there are Development Banks for industry at the National and State level. At the national level are included  Industrial Development Bank of India (IDBI),  Industrial Credit and Investment Corporation of India (ICICI),  Small Industries Development Bank of India (SIDBI),  Industrial Reconstruction Bank of India (IRBI),  Risk Capital and Technology Finance Corporation (RCTFC),  Technology Development and Information Company of India (TDICI),  Shipping Credit and Investment Corporation of India (SCICI) and  Tourism Finance Corporation of India (TFCI). At the same level are



 ‘State Financial Corporations (SFCs) and  State Industrial Development Corporations (SIDCI). Thirdly, there is the Export-Import (EXIM) Bank of India for the foreign sector.

State Financial Corporations are the state level development banks for the development of small and medium scale industries in 18 states of India. They aim at bringing about balanced regional development by wider dispersal of industries, promoting greater investment and generating larger employment opportunities. Besides their paid-up capital, State Financial Corporations augment their funds by borrowings from Governments, RBI, SIDBI and Banks and by way of Bonds / Debentures, by accepting Deposits and sale of Investment in shares and debentures of industrial concerns.

FUNCTIONS: State Financial Corporations perform the following functions:
1) They provide financial assistance to industries by way of term loans, direct subscription to equity / debentures, discounting of bills of exchange and providing guarantees. 2) They meet the term loan requirement of small and medium scale industries for acquisition of fixed assets like land, building, machinery and equipment. 3) They provide loans for setting up new industrial units as well as for expansion and modernization of the existing units. 4) They also promote the development of medium and small-scale industries in backward areas of the country. 5) Under the special capital scheme, SFCs provide equity type support up to Rs.4 lakhs on short terms to entrepreneurs for bridging the gap in equity or promoters contribution, entrepreneurs with viable projects but lacking adequate own funds are assisted under the scheme.



17 of which were set up under the SFCs Act 1951. equipment finance scheme.S. 4 M. BANGLORE . SCIENCE & COMMERCE. 1) 2) 3) 4) 5) 6) 7 8) 9) 10) 11) 12) 13) 14) 15) 16) Andhra Pradesh State Financial Corporation Assam Financial Corporation Bihar State Financial Corporation Delhi Financial Corporation Gujarat State Financial Corporation Haryana Financial Corporation Himachal Pradesh Financial Corporations Jammu & Kashmir State Financial Corporation Karnataka State Financial Corporation Kerala Financial Corporation Madhya Pradesh Financial Corporation Maharashtra State Financial Corporation Orissa State Financial Corporation Punjab Financial Corporation Rajasthan Financial Corporation Tamil Nadu Industrial Investment Corporation Ltd. BANGALORE 6) SFCs operate a number of schemes on behalf of the SIDBI. scheme for ex-servicemen. NUMBER OF STATE FINANCIAL CORPORATIONS: At present there are 18 SFCs in the country. etc. Set up in 1949 under the Companies Act as Madras Industrial Investment Corporation also functions as a fullfledged SFC. These include schemes for women entrepreneurs. single window scheme and special capital/seed capital schemes.RAMAIAH COLLEGE OF ARTS.KARANATAKA STATE FINANCIAL CORPORATION. modernization scheme.Tamil Nadu Industrial Investment Corporation Ltd. schemes for hospitals and nursing homes.


00 lakhs are processed and sanctioned at the Head office. small and medium scale industrial units in the state. KSFC. KSFC has reengineered itself to ensure utmost customer satisfaction with new energy.RAMAIAH COLLEGE OF ARTS. SCIENCE & COMMERCE. Since then it has been working as a regional industrial development Bank of Karnataka.50. Its achievement in these areas is unparalleled. KSFC is fine tuned to fulfill the plans and aspirations of entrepreneurs by extending all possible assistance.S. Term loan up to Rs. while the state economy is making rapid strides in the global market. Keeping this in view. In the 47 year of existence. thrust and speed. BANGLORE 6 . Amendments to the State Financial Corporation Act provide for wide ranging scope of assistance and operational flexibility. Today. KSFC is moving in tandem.50. etc. BANGALORE Introduction:- COMPANY PROFILE:- Karnataka state financial corporation is a state level financial institution established by the State Government. as ISO 9001:2000 certified organization is proud to have played a major role in the industrial development of the state. KSFC has contributed most significantly for the growth of Small-Scale Industries. It is also the proud privilege of KSFC to have assisted many industries that are internationally recognized like the INFOSYS. BIOCON. As a pioneering and responsive financial institution. Origin and Growth:KSFC was established by the Karnataka State Government in the year 1959 under State Financial Corporation Act 1951 for extending the financial assistance for setting up of tiny. backward area development and promotion of first generation entrepreneurs. KSFC has a decentralized system of working. M.KARANATAKA STATE FINANCIAL CORPORATION.00 lakhs are sanctioned at branch offices and loans over Rs.

CORPORATE MISSION:- M. BANGALORE KSFC has branches all over the state.200. Term loans up to a maximum of Rs. Each district has a branch office. with any financial institutions like Industrial Development Bank of India (IDBI). KSFC is also authorized to act as the agent of Government both at central and state level.12 Crores with the prior approval of the Government. partnership and Joint Hindu Family concerns. KSFC holding company’s share capital should not exceed 30% of the subscribed capital of their company or 10% of its own paid capital and reserves whichever is less. SCOPE OF KSFC:The scope of operation of Karnataka State Financial Corporation is confined essentially to small and medium scale enterprises and it is constrained from granting loans to concerns whose paid up capital and reserves together exceeds Rs. 3 supers A grade branch offices.00 lakhs are sanctioned to propriety. SCIENCE & COMMERCE. which can extend up to Rs. in matters connected with grant of advances or subscription. Industrial Financial Corporation of India (IFCI) etc.20 crore.20. KSFC extends term loans to new units up to Rs. In all.RAMAIAH COLLEGE OF ARTS.S. Their aggregate contingent liabilities arising from guarantee and under writing arrangements should not ordinarily exceed twice their paid up capital and reserves.500.00 lakhs for corporate bodies and registered co-operative societies. Moreover. It is also prohibited from financing a concern in which its directors have interest. KSFC has 7 zonal offices.KARANATAKA STATE FINANCIAL CORPORATION. KSFC gives term loans jointly with Karnataka State Industrial Investment Development Corporation (KSIIDC) and commercial banks for projects up to RS. 12 A grade branch offices and 14 B grade branch offices. BANGLORE 7 .00 Crore.

KARANATAKA STATE FINANCIAL CORPORATION. MISSION:“ To be a premier.S. by providing effective and efficient service to all sectors of people under one roof. VISION:Vision of KSFC is to be a premier financial institution in the country. Specialization in the appraisal. They are: 1) 2) 3) 4) Reach and cover the entire state of Karnataka. Its vision is “ALL FOR ONE AND ONE FOR ALL”. existing level of industrialization and entrepreneurship. GOAL:‘OVERALL DEVELOPMENT OF SMALL SCALE AND MEDIUM SCALE INDUSTRIES’ QUALITY POLICY:M. SCIENCE & COMMERCE. Building a body of multi disciplinary professionals.RAMAIAH COLLEGE OF ARTS. A deep routed commitment to the development of entrepreneurs and SSI’s. BANGLORE 8 . Knowledge of suitability for each region in the state in terms of infrastructure and natural resources. self sustained financial institution for catalyzing. creating and sustaining viable investment in the small scale and medium sector of industry and services and the financial sector in the state of Karnataka”. monitoring and recovery of loans of SSI/MSI and other new fund based and fee based activities. BANGALORE KSFC’s corporate plan strategy for resource raising and creating competitive advantage revolves around an organization mission is based on a clear identification and perception of KSFC’s core competencies.

building. However. 5) To encourage everyone in the organization to upgrade and enhance their skill and knowledge with appropriate training for improving quality of service to the entrepreneur.200 lakhs M. 2) To extend effective guidance through entrepreneurs for successful accomplishments of their business. LIMIT OF ACCCOMODATION:The following are the maximum limits of loans that could be availed by entrepreneurs: Category 01 – Proprietary/partnership 02 . 3) To provide good quality of service on a continued basis to the satisfaction of the customer. 4) To attain specified level of performance every year and to ensure compliance with statutory and regularly requirements.RAMAIAH COLLEGE OF ARTS.S. This aim is achieved through professional management and teamwork.KARANATAKA STATE FINANCIAL CORPORATION. plant and machinery and miscellaneous assets required for the project. BANGALORE KSFC endeavors to create satisfied customers through adequate and timely financial assistance and guidance. QUALITY OBJECTIVES: 1) To ensure satisfaction through teamwork and professional management.500 lakhs 9 Maximum loan Rs. PURPOSE OF ASSISTANCE:The corporation extends financial assistance for acquiring fixed assets like land.Corporate bodies (private/public limited) & registered Co-operative societies Rs. BANGLORE . SCIENCE & COMMERCE. the corporation also extends working capital under Single Window Scheme to new units and corporate loan to the existing good units to meet short-term gap in working capitals requirements.

RAMAIAH COLLEGE OF ARTS.  In respect of existing units (category 02 only) operating successfully.00 lakhs.KARANATAKA STATE FINANCIAL CORPORATION.00 crore. The loans are given based on the lending policy of the Corporation.up capital and free reserves does not exceed Rs. With a branch network of 29 offices spread M. The lending policy covers various aspects like exposure to the group.S. SCHEMES:Today.5.00 lakhs is not sanctioned by the Corporation excepting transport loans. LENDING POLICY OF THE CORPORATION:The Corporation formulates lending policy at the beginning of the each year. The industrial policy of the state and central government is taken into account while formulating the lending policy of the Corporation. BANGALORE Note:  In respect of both the categories mentioned above.20.00 lakhs depending on the merits of the case with prior approval of the Small Industries Development Bank of India (SIDBI)  In respect of category 02. maximum limit can be extended to Rs.  If the requirement of funds for a project is substantial & cannot be extended by the Corporation singly. the Karnataka state financial corporation is one of the leading State Financial Corporations in the country. the financial assistance can be granted provided the paid.5.1000. SCIENCE & COMMERCE. then the requirement of loan of such projects can be made in consortium with Karnataka State Industrial Investment Development Corporation (KSIIDC) / BANKS. the minimum loan that could be sanctioned by the Corporation is Rs. sectors in the negative list (loans are not granted to such sectors). BANGLORE 10 . thrust sectors. Loan below Rs.

KSFC has also evolved loan schemes for extending financial assistance to service sectors like Hotel and Tourism related Industry. 3 super “A” Grade Branch offices. 1) Bangalore Rural Zone 2) Mysore 3) Mangalore 4) Gulbarga • • ZONAL OFFICES: 5) Belgaum 6) Davangere 7) Dharwad SUPER ‘A’ GRADE BRANCH OFFICES 1) Bangalore M. Industrial Estates. the corporation is making good headway and has potential for a steady growth. and the state of Karnataka advantageously placed in these sectors. SCIENCE & COMMERCE. BANGLORE . 12 “A” Grade Branch offices and 14 “B” Grade Branch offices with an empowered and decentralized administrative system. Road Branch 2) Bangalore Jayanagar Branch 3) Bangalore Rajajinagar Branch • ‘A’ GRADE BRANCH OFFICES: 7) Mangalore 8) Hassan 9) Mandya 10) Kolar 11 1) Bangalore Rural 2) Belgaum 3) Dharwad 4) Mysore M.G.S. Though. well known organization to meet the demanding challenges of entrepreneurs. it is more on account of the bearish forces of the Indian economy. SERVICE NETWORK:KSFC services the nook and corner of Karnataka with its extensive network of 7 Zonal offices.KARANATAKA STATE FINANCIAL CORPORATION. BANGALORE throughout the state of Karnataka. KSFC is a fine tuned.RAMAIAH COLLEGE OF ARTS. Hospitals. However with the unprecedented growth in the services and the IT sectors. KSFC has evolved loan schemes for extending financial assistance to suit almost all kinds of industrialist's entrepreneurs and technocrats. both big and small. the performance indicators of the corporation have shown a small slump in the recent years. Nursing homes etc.

The schemes formulation by the corporation: • • • • • • Bridge loan against state subsidy (highly restricted ) Acquisition of private vehicles.KARANATAKA STATE FINANCIAL CORPORATION.50.RAMAIAH COLLEGE OF ARTS. The industrial units / service sectors established or to be established within the state only are eligible for assistance. KSFC has branches in all the district headquarters.S. Requirements of financial assistance up to Rs. BANGLORE .00 lakhs are handled by the concerned branch office.50.00 lakhs. Corporate loans Equipments Lease Financial and Hire Purchase (ELF & HP) Merchant Banking and Financial services Rental Discounting scheme 12 M. BANGALORE 5) Gulbarga 6) Tumkur 11) Bellary 12) Udupi 1) Shimoga 3) Bijapur 4) Raichur 5) Bidar 6) Karwar • ‘B’ GRADE BRANCH OFFICES: 9) Haveri 8) Madikeri 2) Chitradurga 10) Bagalkot 11) Davangere 12) Gadag 13) Chamarajnagar 14) Koppal 7) Chikmagalur AREA OF OPERTION:The area of operation covers the entire state of Karnataka. entrepreneurs will have to approach the head office. If the requirement of loan is more than Rs. SCIENCE & COMMERCE. The branch offices of the corporation are adequately delegated with powers of sanction and disbursements.



It extends all types of financial assistance in the form of long-term loans. SCIENCE & COMMERCE. KSFC is a category one merchant banker as approved by Securities and Exchange Board of India (SEBI). The other activities are subscription to the non-convertible debentures and factoring services. Plans are on the avail to extend ISO certification to branch offices in a phased manner. short term loans (in the form of corporate loans). which is the backbone of this mighty organization. The Merchant Banking Division takes up management of public issues. Lease finance. • INSURANCE ACTIVITY: M. DPG. the corporation obtained the ISO 9001:2000 recertification’s to the revised standards from M/s Bureau of Indian standards for a further period of 3 years. Statisticians. Syndication of loans. Engineers. Market Researchers. super ‘A’ grade branch offices are proposed to be taken up in the ensuring year.S. Hire purchase finance. KSFC’s assistance covers almost all types of industrial and service sectors. BANGALORE KSFC has professional team of experts drawn from various disciplines lead by illustrious leadership of senior IAS officer. Merchant Banking and financial services etc.RAMAIAH COLLEGE OF ARTS. FINANCIAL SERVICES:KSFC is a financial super market. Economists and Information Technologists. It is this team of professional wizards. BANGLORE 15 . Bills Discounting etc. AWARDS AND RECOGNITION • ISO CERTIFICATION: During the year. The personnel of KSFC are top rated Managers.KARANATAKA STATE FINANCIAL CORPORATION. In the first phase. Financial Analysts.

RAMAIAH COLLEGE OF ARTS. The corporation insured assets in respect of cases and mobilized a premium of Rs. Bangalore from 9th to 11th December 2005. ACTIVITIES OF KSFC: KSFC PARTICIPATION EXHIBITION IN VISION 2006 INDUSTRIAL Small Industries Service Institute (SISI) Bangalore. M. IFFCO-TOKIO has awarded KSFC the certification of excellence for outstanding performances as a service provider in the year 2004-05. automobile and solar lightings etc. Provision regarding NPA is considered after taking credit for this amount.S.39 lakh under general insurance up to March 2007. SCIENCE & COMMERCE. Rajajinagar Industrial Estate. 10.00 lakh which have become NonPerforming Assets as on 01-04-2006. Indian Lighting Engineers (ISLE) Bangalore and Karnataka Small Scale Industries Associations (KASSIA) Bangalore had jointly organized VISION 2006 Lighting & Allied Electrical Products Industrial Exhibition cum Vendor Development Programme at SISI Campus. government departments. BANGALORE The corporation has taken corporate agency with IFFCO-TOKIO General Insurance limited for distribution of Non. BANGLORE 16 .00 crore has been made for the financial year 2007-08.KARANATAKA STATE FINANCIAL CORPORATION. A budgetary provision of Rs. • BUDGETARY PROVISION: The Government of Karnataka has consented and committed to fund simple interest in respect of small loans upto Rs.life insurance products. public sector undertakings etc for lighting and allied electrical products. The objective of the programme was to showcase the potential of small and medium enterprises and focus the needs of large-scale industries.

More than 60 industries are engaged in the manufacture of rice milling machinery. Nearly 70 entrepreneurs and 34 executives from different banks and financial institutions participated in the workshop.RAMAIAH COLLEGE OF ARTS. SCIENCE & COMMERCE. Karnataka State Financial Corporation participated in the exhibition and actively exhibited its products and services. BANGALORE About 20 industries engaged in the manufacturing /trading of lighting and allied electrical products and solar lighting participated in the exhibitions.The main theme of the exhibition was to create awareness on new processing and marketing strategies among the rice industry entrepreneurs. the 5th International Exhibition and conference on Rice Processing Technology was organized by Shiny Trade Expositions (Rice mill reporter publications Group. WORKSHOP ON ‘ACCESSS TO FINANCE FOR WOMEN ENTERPRENEURS’: AWAKE & FICCI Ladies Organization have jointly organized a two day Workshop on ‘Access to finance for women entrepreneurs’ at Hotel Atria. Karnataka State financial Corporation took up a stall in the exhibition. Vijay Wada) at Palace Grounds. • To improve access to finance for women entrepreneurs 17 M. BANGLORE . KSFC participated in the exhibition and actively propagated its products and services. There were large number of visitors from Karnataka and neighboring States. Bangalore on 2nd and 3rd December 2005. The workshop was organized with the objectives.KARANATAKA STATE FINANCIAL CORPORATION.S.Bangalore. Bangalore from 9th to 11th December 2005. PARTICIPATION IN THE 5 TH INTERNATIONAL RICE TECH EXPO RICE TECH EXPO.

M. Ratna Ravikumar represented the KSFC Seminar on Development of Women Entrepreneurs in the State of Karnataka . KSFC. To bring about better understanding between bankers and women entrepreneurs. Bangalore in association with SIDBI and AWAKE has organized a seminar on Development of Women Entrepreneurs in Karnataka at the SISI campus on 3-1-2006. BANGALORE • Awareness on the various schemes and policies. SISI (Small Industries Service Institute). KVIC etc.KARANATAKA STATE FINANCIAL CORPORATION. Sri. TECSOK. Women and Child welfare. CEDOK.S.RAMAIAH COLLEGE OF ARTS.KVIB. General Manager (BD & CR) represented KSFC in the meet and addressed the participants. NABARD. In this workshop Mr. KCTU. Asst. Prabhu. SCIENCE & COMMERCE. BANGLORE 18 . S. Besides members of AWAKE and other women entrepreneurs the meet was attended by representatives of Government Departments and agencies like Industries and Commerce.


KARANATAKA STATE FINANCIAL CORPORATION. BANGALORE SERVICES OFFERED BY KSFC ♦ EQUIPMENT LEASE FINANCE : Industrial units working profitably can avail services of plant and machinery on lease without making investment or incurring debt obligation and become more competitive and efficient. mutual fund products of Rs. 5 lakhs. SCIENCE & COMMERCE. pre-issue appraisals. syndication of loans.49 lakh were marketed. Industrial concerns in commercial production for 2 years and earned profits and are regular in their repayments to financial institutions can avail the assistance.RAMAIAH COLLEGE OF ARTS. deferred payment guarantees project report preparations. ♦ MERCHANT BANKING SERVICES: KSFC has been approved as a category 1 merchant banker by the Security Exchange Board of India (SEBI) and takes up management of public issues. under writing of shares. The minimum assistance under the service is Rs.S. BANGLORE 20 . ♦ HIRE PURCHASE : This scheme provides for a fast. Though. opening foreign letter of credit. easy alternative to ready cash. ♦ MUTUAL FUND ACTIVITIES: During the year of 2006-07 the Corporation entered into MoU (Memorandum of Understanding) with UTI for marketing of Mutual Fund products of UTI. M. The applying unit should be in production for the last 2 years. this activity was started in the last quarter of 2006-07. earning profits and regular in repayment to financial institutions. 138.

KARANATAKA STATE FINANCIAL CORPORATION. etc.  DIFFERENT TYPES OF INDUSTRIES COVERED BY KSFC: • • • • • • • • • • • • • • • • • Basic Metal Beverages Chemical and Chemical products Coal Electric machinery Electric. BANGLORE 21 . gas and steam Fishing Food excluding Beverages Footwear and other wearing apparel and made up textile goods Furniture and Fixtures Hotels Houseboats Industrial Estates Leather. MMP. leather and furniture products Machinery excluding electric machinery Manufacture of textiles Transport M. SCIENCE & COMMERCE. HDFC.RAMAIAH COLLEGE OF ARTS.S. BANGALORE ♦ CONSULTANCY SERVICES: The Corporation is also hopeful of earning sizeable income by undertaking the consultancy services of various works of Municipal Corporations like BBMP.

KARANATAKA STATE FINANCIAL CORPORATION. it’s clear that a very important role is played by KSFC.S. diversification etc. BANGLORE 22 . M. then the bulk of the Small and Medium Enterprises (SME) segment had to fend for itself with deleterious economic and social consequence. BANGALORE  Various Sectors Covered by KSFC: • • • • • • Public Sector Partnership Firms Co-operative Sector Private Sector Joint Hindu Family Proprietary Concern From the above. plant and machinery and other fixed assets.. building. if the State Financial Corporations too had oriented and limited themselves to bigger and profitable undertaking established by the second and third generation entrepreneurs. modernization. SCHEMES OF THE CORPORATION: ♦ General scheme: The corporation extends financial assistance for new enterprise to establish SSIs / MSIs/ service units for expansion. SCIENCE & COMMERCE.RAMAIAH COLLEGE OF ARTS. by the existing units to meet a part of cost of land. Similar to the commercial banks.


♦ National Equity Fund Scheme (NEF S):
This scheme provides equity type of assistance (soft seed capital) upto RS.10.00 lakhs to small entrepreneurs for existing and new projects in the tiny, small scale, service sectors and for rehabilitation of potentially viable sick SSI units. The ceiling on project cost is Rs.50.00 lakhs and the promoter's contribution is 10% of the project cost (including working capital margin). While the equity type of assistance (SSC) carries interest at 5% p.a. the term loan carries normal rate of interest. A net interest rate works out to 9.69% for loans below Rs.25 lakhs and 10.35% for loans above Rs.25 lakhs.

♦ Mahila Udyam Nidihi Scheme (MUNS):
This scheme is meant for extending financial assistance for first generation women entrepreneurs to set up SSI units. The scheme provides equity type assistance (soft seed capital) along with term loan for existing and new projects. The ceiling on the project cost is Rs.10 lakhs and the minimum equity assistances Rs.2.50 lakhs, which attracts 1% service charge only p.m. The term loan component carries normal rate of interest. The women entrepreneurs who seek assistance under this scheme should possess managerial and necessary skill to run the unit and shall be the chief promoters of the proposed unit.

♦ Scheme for Technology Upgradation for Textile Industries (TUFs):
The objective of the scheme is to provide encouragement for Textile Industries (including cotton ginning pressing units) in the small scale industrial sector for technology upgrading and to modernize their production facilities. The scheme covers projects costing Rs.5 lakhs to Rs. 50 lakhs. New and existing units are eligible for this



assistance. The prevailing of interest as applicable to SSI is charged. The present lending rates are 11.00% p.a. and 11.50% p.a. for loans below Rs. 25.00 lakh and above Rs.25.00 lakh respectively.

♦ Credit Linked Capital Subsidy Scheme (CLCSS):
The objective of scheme is to facilitate technology upgradation of SSI units or SSI units graduating to MSI in specified products / sub-sectors by providing 15% with maximum subsidy amount of Rs.15.00 lakhs and investment limit to Rs.100 lakhs on the loan given for machinery. Existing SSI units registered with the State Directorate of Industries who upgrade with the state of art technology, with or without expansion are eligible.

♦ Technology Development Fund Scheme (TDMF):



To encourage small and medium scale entrepreneurs and to upgrade the technology and modernise their existing production facilities the Government of Karnataka has come up with an interest subsidy scheme. The scheme is applicable to the units financed by KSFC and KSSIIDC only. Existing units who are in operation for at least 3 years and who are not default to institutions/ banks in payment. Units graduating from SSI to MSI sector and service sector are also eligible. For availing loan under TDMF, the project cost shall not exceed Rs.100.00 lakhs. The scheme envisages reimbursement of 4% interest p.a. as a interest subsidy on the term loan availed from the Government of Karnataka.

♦ Single Window Scheme (SWS):
This loan scheme is for providing assistance to new tiny and small units whose project cost (excluding working capital margin) does not exceed Rs.50.00 lakhs and the total working capital requirement at the normal level of operation is up to Rs.20.00 lakhs. M.S.RAMAIAH COLLEGE OF ARTS, SCIENCE & COMMERCE, BANGLORE 24

Term loan on fixed assets and term for working capital is sanctioned based on the debt equity ratio of 2:1 for loan above Rs.10.00 lakhs and 3:1 for loan up to Rs.10.00 lakhs.

♦ Corporate Loan Scheme (SLS):
The objective of the scheme is to extend short – term loans to the existing successful units who require urgent working capital funds either to meet the gap in the working capital requirement or funds required for developing / expanding new market and opening Letter of Credit for purchase of new equipment till term loan is sanctioned and released. The repayment period does not exceed 30 month including moratorium period of 6 months. The corporate loan is restricted normally to the manufacturing sector.

♦ Rental Discounting Scheme:
The objective of the scheme is to provide financial assistance on the strength of future rental to be earned by non residential proportion located within the city and municipality limits of Bangalore, Mangalore, Hubli- Dharwad, Gulbarga, Shimoga Bhadravathi, Mysore and Belgum subject to gross rent earning of not less than Rs. 25000/- per month.

♦ Foreign Letter of Credit (FLC):
KSFC has been operating the scheme of opening Foreign Letter of Credit for importing the capital goods through commercial bank exclusively for our borrowers since 1995. The scheme is operated in the Hire Purchase and Financial Service department of head office.

KSFC has entered into a strategic alliance with IFFCO-TOKIO General Insurance Company to market the Non Life Insurance Products. This would enable the clients of KSFC to have credit and the insurance under one roof. The premium tariffs 25


Bankers indemnity. BANGLORE 26 . M. INFRASTRUCTURE DEVELOPMENT ACTIVITY: Infrastructure is an integral part of the services sector and plays a crucial role in the industrial development. The services sector has emerged as one of the major contributors to the country’s GDP growth rate. Trade and office • Life Insurance Corporation: An MoU (Memorandum of Understanding) was signed with Life Insurance Corporation of India in March 2007 for marketing of LIC products.RAMAIAH COLLEGE OF ARTS. SCIENCE & COMMERCE. Personal accident cover Electronic equipment.S. Inadequacy in infrastructure stunts economic development.. Recognizing this. An exclusive Insurance Cell with well-trained staff is in operation at Head office. etc. Earth quake. There is now a wide spread consensus that exclusive dependence on government for provision of all infrastructure services is not feasible and private public participation is essential for realising optimal outcomes in the sector. The details of the general perils covered are: • • • • • Fire. Cash safe / transit Fidelity guarantee.KARANATAKA STATE FINANCIAL CORPORATION. The Corporation’s initial focus is to identify valuable vacant lands in the prime localities in and around the Bangalore city. Machinery breakdown Marine. Burglary. owned by various government departments / agencies / registered societies / trusts. including SEZs and explore joint development ventures. Household insurance. Vehicle insurance Medical insurance. the Corporation has taken up infrastructure development projects with public / private participation. BANGALORE applicable are same as the other insurance companies and at no extra service charges.


Credits. 12 A grade branch offices and 14 B grade branch offices with an empowered and decentralized administrative system. Managers head all B grade branches. 3 super A grade branch offices. To assist Managing Director.S. Managers and Deputy Managers are executing the policies at the middle level. At the senior management level DGMs. Recovery. Zonal offices and Super A grade branches are headed by DGMs. Board of Directors of KSFC is headed by the Chairman and the Managing Director is appointed by state Government. SCIENCE & COMMERCE. It is the only term lending financial institution in the Karnataka with such a widespread network. AGMs with a legal Advisor and 2 Additional Legal Advisor are functioning.RAMAIAH COLLEGE OF ARTS. grade branches are headed by AGMs. It has 15 divisions. BANGALORE ORGANIZATIONAL STRUCTURE: KSFC has extensive network office encompassing entire Karnataka. BANGLORE . ABBREVIATIONS: ED EA MD GM Executive Director Executive Assistant Managing Director General Manager 28 M. The head offices of the organization have divisional structures. KSFC serves every nook and corner of Karnataka with its network of 7 zonal offices.KARANATAKA STATE FINANCIAL CORPORATION. KSFC has 2 executive director (Finance and Operation) and 6 General Managers-Corporate planning. Zonal offices. Administration and Asset Reconstruction.

BANGLORE FSD SUMD FSD-Financial Service Department IDD-Infrastructure Development Dept GM Corporate Plan BD & CR DGM DGM (R) ..S.Sick Units/ Monitoring DGM WEGC Legal Department IDD R – Recovery DGM 29 AGM PGC.) Manager Personnel Manager Disciplinary Manager Administration Manager Construction GM (Zones) DGM (HP& Le) AGM Bangalore AGM Mysore AGM Dharwad AGM Raichur DGM (Zones) Zonal Managers AGM (Zones) AGM HP/ Le DGM Credit AGM Credit DGM (AR) AGM (AR) GM (R) HP&Le-Hire Purchase& Leasing IT .Women Entrepreneurial (EG) Guidance Cell AGM AGM (Treasury) SUMD.Public Grievances Cell M. SCIENCE & COMMERCE.Manager Information Manager Technology AGM(R) MIS – Management ISO Cell Information PGC Branch Service Managers AGM AR . BANGALORE DGM AGM ZM BM Deputy General Manager Assistant General Manager Zonal Manager Branch Manager ORGANIZATION STRUCTURE OF THE COMPANY: Managing Director Executive Director (Finance) ( Executive Director (Operation) General Manager (Cr) GM (AR) DGM Internal Audit GM (Admins.RAMAIAH COLLEGE OF ARTS.Asset Reconstruction DGM AGM IT BD & CR Legal BD&CR-Business Development DGM & Credit Research (Controller) AGM EG – Entrepreneurial Guidance Library AGM MIS Records WEGC.KARANATAKA STATE FINANCIAL CORPORATION.

08% 0.900 2.88% STATE GOVERNMENT U/S 4(3) (a) U/S 4(5) Special capital issued U/S 4A IDBI: U/S 4(3) (a) Special capital issued U/S 4A Insurance Companies Investment Trusts.090 7. BANGLORE 30 .92. 5.84% 3.73. U/S 4(3) (c) 2.27.16% 0.475 69. N O 1. 0. M.388 11.27.03% 4.S. PARTICULARS NO. U/S 4(3) (c) Public Sector Banks U/S 4(3) (c) Other Parties.500 22.000 5.KARANATAKA STATE FINANCIAL CORPORATION. Other Financial Institutions.500 16.692 6.RAMAIAH COLLEGE OF ARTS. 29. BANGALORE SHARE HOLDING PATTERN SL .OF PERCENTA SHARES GE (in Units) OF HOLDING 51.37. SCIENCE & COMMERCE.

2007 08.00 BOARD OF DIRECTORS:Sl No Name of the Directors Period From To 08-04-2007 Under section of SFC’s Act-2000 10(a) 10(f) 10(a) 1 Sri.Mohamed Sanaulla. BANGALORE TOTAL (All Shares have cost of Rs.2006 10(a) 10(b) 10.08.IAS.04.545 100.Umesh.2005 17.2006 15.O.10.IAS Sri. BANGLORE 31 .Rajakumar Khatri.Gokulram.S.08.11.2005 16.04. 100 each) 97.2006 16.2005 23.Ramesh. IAS Sri .R. Chairman & Managing Director Sri.05.Vinod Sri.Bhama Krishnamurthy 21.V.2007 3 4 5 6 21.V.IAS Managing Director b) Sri.2006 10.2006 09.06.Kamble.04.Umesh.02.2007 09.RAMAIAH COLLEGE OF ARTS.05.IAS Chairman 2 a) Sri.12.M.S. SCIENCE & COMMERCE.N.2006 10(c) 10(c) M.KARANATAKA STATE FINANCIAL CORPORATION.Dharmaji Smt.84.IAS Sri.G.

H. promotion.2007 30.2005 10(f) FUNCTIONAL DEPARMENTS OF KSFC ♦ ENTREPRENEUR GUIDANCE CELL: The function of the department is to guide the entrepreneur regarding matters like business opportunities.R. welfare and industrial relations and pay rolls. etc.2007 05.11. the department has a human resources department cell. IAS. SCIENCE & COMMERCE. B.G.2005 27.2006 10(e) 10(e) 10(e) 10(e) 22.Nagaraju 24. ♦ LEGAL DEPARTMENT: M. R.10. different schemes available.Ananthan Sri. ♦ PERSONNEL DEPARTMENT: This department is in charge of recruitment.Suresh Prabhu Sri.2003 26.S.11. discipline.Nataraj.RAMAIAH COLLEGE OF ARTS.Abrol Sri.K.R.03.S.11.S.10.2006 10. Jayaramaraje Urs. transfer of employees. BANGLORE 32 . In addition. MD 24.2004 31. This is the department through which new client come in contact with Karnataka State Finance Corporation.S.05.06.V.P.2006 10(d) 11.Gupta Sri.2006 10 Sri.K.Doreswamaiah 11 Sri. and procedure to be followed to get the loan. which carries out training and development work.05.Hanchinamani Sri.KARANATAKA STATE FINANCIAL CORPORATION. BANGALORE 7 8 9 Sri.2007 10(d) 15. job rotation.Angadi 12 Sri.

KSFC is the first SFC to start this scheme.   Evaluation of different scheme of KSFC and suggest changes if necessary. ♦ HIRE PURCHASE AND LEASING DEPARTMENT: This department is incharge of leasing and hire purchase activities of corporation. BANGALORE This department attends to all the legal matters affecting the interest of the corporations. BANGLORE 33 .RAMAIAH COLLEGE OF ARTS. This department was started with the introduction of the equipment of leasing finance scheme. Publishing the KFSC news letters – KSFC NEWS. M. ♦ SICK AND MONITORING CELL: The cell. The following are few activities:  Preparation of district profiles with substantial growth potential among the existing port folio.  Analysis of high default schemes of KSFC and suggest improvement for the same. SCIENCE & COMMERCE. MAHITI.S. conduct in depth studies regarding cases referred and assess the eligibility for rehabilitation assistance. which has been formed for rehabilitation of potentially viable sick units. ♦ BUSINESS DEVELOPMENT RESEARCH DEPARTMENT: AND CREDIT This department conducts research based on several factors and helps the management to take decisions. The basic function of this department is to appraise the project legally which the entrepreneurs submit for getting the loan.KARANATAKA STATE FINANCIAL CORPORATION.

♦ MANAGEMENT DEPATMENT: INFORMATION SYSTEMS This department is solely responsible for providing up-to-date statistical information of all the branches. ♦ CREDIT DEPARTMENT: The main function of the credit department are appraising the projects. SCIENCE & COMMERCE.KARANATAKA STATE FINANCIAL CORPORATION.. public issues. required by the management. BANGLORE 34 . ♦ TREASURY DEPARTMENT: Treasury Department is given important from these recent years onwards because of the new challenges faced by KSFC in mobilizing its funds in the era of liberalization.. effective changes in management of assisted companies. disbursement of funds and monitoring progress during the implementation of the project and to keep check on cost overruns and to ensure that funds are utilized for the purpose intended. departments etc. The main function of treasury department is estimation of funds for lower possible cost.RAMAIAH COLLEGE OF ARTS. bills discounting etc. effective take over of default in units and insisting recovery proceedings are the main functions of recovery department. are carried on. ♦ RECOVERY DEPARTMENT : Recovery of loans sanctioned by the corporation and all other related functions like rescheduling of loan. BANGALORE ♦ MERCHANT BANKING DEPARTMENT: The activities of this department are broadly categorized into fund based and non fund based services like deferred payment guarantees. M. project report preparation. syndication of loans.S. under writing of shares.

This department verifies all the cases under review and occupies defaulting units and takes steps to recover the loan by step to step by selling the units. income tax filling of statutory returns and statements.S. ledger. BANGLORE 35 . disbursement of funds to the loans and to monitor progress during the implementation of the project and to keep a check on cost over runs and to ensure that funds are utilized for the purpose intended. ♦ FINANCE AND ACCOUNTS DEPARTMENT: This department is responsible for maintaining various accounts.RAMAIAH COLLEGE OF ARTS.KARANATAKA STATE FINANCIAL CORPORATION. BANGALORE ♦ INFORMATION TECHNOLOY DEPARTMENT: This department was formed to computerize all the records and documents of KSFC with large-scale computerization. ♦ INTERNAL AUDIT DEPARTMENT: Auditing of books of accounts.. This department is incharge of developing and managing the Letter Of Credit (LOC) etc. ♦ APPRAISAL. verifying title deeds of properties offered as securities. SCIENCE & COMMERCE. DISBURSEMENT AND MONITORING DEPARTMENT: The main functions of this department are to appraise the projects. cashbook and other books of accounts. M. ♦ ASSET RECONSTRUCTION DEPARTMENT: The asset reconstruction department at the head office is formed to review the chronic section 29 cases. business adhered to follow up for compliance of observations/recommendations made in reports of Statutory Authority and SIDBI’s inspection report will be verified by this department. The corporation aims to function as a paperless office. DC referred cases and suit filed cases.

The department has already initiated realizable joint venture projects like IT Park.RAMAIAH COLLEGE OF ARTS. the Shopping Mall. It is a separate and fully operational department. To encourage dispersal of industries to the backward areas to maintain balanced growth of industries. ♦ FINANCIAL SERVICES DEPARTMENT: This department has also started from this year. etc have been taken up by this department. marketing of Life and General Insurance products.S. To provide financial assistance in the form of term loans to tiny and small scale industries. for implementation in the near future. marketing of UTI mutual fund products. Hire Purchase. As part of restructuring. In order to augment income generation. BANGLORE 36 . OBJECTIVES OF KSFC: The corporation has been established with the basic objective of promoting industrial development in Karnataka. The KSFC was desired to particularly emphasis to specialized institution government. To provide equipment leasing. SCIENCE & COMMERCE. working capital and assistance to Research & Development activities. BANGALORE ♦ INFRASRUCTURE DEPARTMENT: DEVELOPMENT This department has started from this year.    M. ancillary industries and medium scale industries in Karnataka. the corporation initiated several measures directed towards fee-based activities. Commercial Complex. fee based activities like stamp vending.KARANATAKA STATE FINANCIAL CORPORATION. or SEZ etc.

BANGALORE  To identify entrepreneurs throughout the state.RAMAIAH COLLEGE OF ARTS.KARANATAKA STATE FINANCIAL CORPORATION. SCIENCE & COMMERCE.      M. To develop data bank on industrial units. BANGLORE 37 .S. To identify new projects and help local people to set up industries. To conduct district level industrial seminars. To provide special assistance to tiny and small scale industries. To provide enterprise development programs to women engineering and technical professionals and agriculturists.

lodging and restaurant facilities and building plans approved by the local authorities. BANGALORE ACTIVITES OF KSFC ♦ Assistance to Hotels / Restaurants: Medium and star category standard hotels proposed in state capital. The existing hotels going in for expansion/renovation are eligible for assistance. district and taluk head quarters and important tourist centers within the state are eligible for financial assistance. M. Hotels proposed as per the specification of tourism department.KARANATAKA STATE FINANCIAL CORPORATION.S. Mobile canteens/catering units are also considered for assistance subject to eligible and providing adequate collateral security as per the prevailing lending policy. The hotel should have boarding.RAMAIAH COLLEGE OF ARTS. government of Karnataka are eligible for incentives as per the tourism policy of state/central governments. BANGLORE 38 . SCIENCE & COMMERCE.

Assistance under the scheme is provided for construction of building. Medical professionals having Bachelor’s degree in and branch of medicine from recognized university are eligible for financial assistance for setting up Clinics.KARANATAKA STATE FINANCIAL CORPORATION. Residential apartments/group housing. radiology etc are eligible for assistance for acquiring C. bridges etc. training institutions. flyovers. godown. ♦ Assistance to Construction Infrastructure Projects: activities and Commercial complexes are an important infrastructure for the growth of Small and Medium Enterprise and service units. IT parks. The commercial complexes constructed can be either leased or sold on out right basis with the prior approval of the corporation.T scanners. warehouses and development of layouts are provided financial assistance.RAMAIAH COLLEGE OF ARTS. ♦ Assistance to Tourism related activities: M. Assistance is also extended to acquire ready built shop or for construction of medical stores subject to conditions. With a view to facilitate the development of infrastructure financial assistance is also provided for establishing infrastructure projects like roads. endoscope and other electronic medical equipments required by medical practitioners and hospitals. industrial estates. BANGALORE ♦ Assistance to the Doctors /Hospitals /Nursing Homes : Hospitals and nursing homes are eligible for financial assistance from KSFC must be backed by expert services of at least one postgraduate doctor. dentistry. Assistance is available for acquiring land.S. building and equipments for diagnosis monitoring and therapeutic use and air conditions (for operation theatres and intensive care units) ambulance etc. X-rays. Medical practitioners with relevant qualifications in general medicine. lift and communication facilities etc. Interior decoration. BANGLORE 39 . marketing outlets and for small business. air conditioning. SCIENCE & COMMERCE.

as per the checklist along with applicable processing fee.RAMAIAH COLLEGE OF ARTS. the main promoters are called for discussion before the PCC.S. production of short TV serials and feature films/filmed a within Karnataka. setting up of conventional/cultural centers. The proposal will be placed before the Project Clearance Committee (PCC) chaired by the Managing Director at Head Office and Zonal Managers/Branch Managers at Branches. if the project is found support worthy. loan application form is issued on the spot (a set of three applications). M.KARANATAKA STATE FINANCIAL CORPORATION. BANGALORE The corporation provides financial assistance for tourism related activities like development of amusement parks. Project clearance committee : A brief project profile along with supporting papers/documents will have to be given by the promoters. SCIENCE & COMMERCE. restaurants. The promoters are also required to give bio-data and net wroth details as per the format. The duly filled in applications have to be submitted in duplicate along with other documents. which will be scrutinized by EG (Entrepreneur Guidance) department as the case may be. TV serial and software for visual media. Details are to given as per the checklist. travel and transport and tourism service agencies. Maximum financial assistance is up to 70% of the cost of the proposed fixed assets in the case of cinema halls and multiplexes and 50% of the total production and postproduction cost in the case of features films. BANGLORE 40 . On receipt of the project profile and other detail. After discussions.  Procedure for availing Financial Assistance: Entrepreneurial guidance (EG) section headed by the Assistant General Manager at the head office and branch managers will guide the entrepreneurs on various schemes. ♦ Assistance to Entertainment Industry: KSFC provides financial assistance for the construction/purchase of cinema halls and multiplexes. loan facilities available etc.

BANGLORE 41 . execution of hypothecation and mortgage deed etc. Up-front fee: SSI and others: ½% of the loan amount. documentation fee for legal scrutiny of the title deeds. in case the loan application is rejected. Medium scale industries: 1% of the loan amount.  Promoter’s contribution: The promoter’s contribution varies between 12.5% and 25% depending on the location of the project. The application processing fee and up-front fee are non refundable. refund up to maximum of 75% of loan processing fees paid is allowed on a case to case basis after deducting handling charges. line of activity etc. SCIENCE & COMMERCE. at 0.RAMAIAH COLLEGE OF ARTS.S. BANGALORE  Processing fee & other fees : The following are the processing fee structure prevailing at present: Application processing fee: ½% of the loan amount.1% of loan amount is being charged. Debt equity ratio (DER): (i) For loans up to Rs. Legal fee: In addition to the above.10 lakhs (ii) For loans above 10 lakhs 3:1 2:1 M. However.KARANATAKA STATE FINANCIAL CORPORATION. The up-front loan fee will have to be paid the time of legal documentation or before availing the first disbursement of the loan amount. category.

BANGALORE The corporation adopts the norms of promoter’s contribution and debt equity ratio as per the guidance issued by the SIDBI from time to time. Primary Security: The primary security for loan will be the assets financed i.e. are to be pledged/hypothecated. Collateral Security: All loans are to be backed by collaterals in the form of commercial or residential properties located in the state of Karnataka. bill and book debts.RAMAIAH COLLEGE OF ARTS. average DSCR ranging between 1.  Debit services coverage ratio (DSCR): The repayment period of loan is fixed by the corporation with due regard to the cash generation and profitability of the project. land. BANGLORE 42 .  Repayment of the loan: The repayment of the term loan varies between 5 to 7 years with a moratorium of 1 to 2 years depending on the period of implementation. Fixed deposits. In respect of corporate loan the maximum repayment period is 30 months including six months moratorium. 2. besides. NSCs (National Saving M.S. For this purpose. work in process and finished goods. The DCSR indicates the ability of the project to services to services the debts during the currency of the loans.KARANATAKA STATE FINANCIAL CORPORATION. SCIENCE & COMMERCE. If working capital loan is provided the inventories in the form of raw materials.5:1 and 2: 1 is accepted as reasonable.  Security: 1. building and machinery.

Branch offices also follow the similar procedure. credit department at HO/ branch office monitors the projects implementation and disburse the funds based on the securities created and after ensuring that the promoters have brought in the stipulated equity/contribution to the project is completed and final disbursement is made. BANGLORE 43 . BANGALORE Certificates). NOTE: The primary and collateral are to be by way of simple mortgage at jurisdictional SRO (Sub Registrar Office). The credit department appraises the projects and places them memorandum of sanction before the appropriate authority for sanction approval. SCIENCE & COMMERCE.S. collects the processing fee and forwards the papers to the credits department.KARANATAKA STATE FINANCIAL CORPORATION. etc and residential properties of third parties to the corporation will be further charged. collateral security to the extent of 100% of the loan amount is insisted in respect of existing units assisted by the corporation and in respect of other units collateral security will by 150% of the loan amount. The above is the procedure in brief for availing financial assistance from the corporation. in the absence of adequate security in the form of primary assets. Thereafter.RAMAIAH COLLEGE OF ARTS. M.  Sanction and disbursement of loan: After the proposal is cleared by the project clearance committee the EG department scrutinizes the application and the enclosures submitted.  Legal scrutiny and documentation: Legal officers in credit department at head office and in branch offices will take up the legal scrutiny of documents after the sanction of loan. In case of corporate loan. They ensure acceptance of terms and conditions by promoters and complete legal documentation process.

BANGLORE 44 .KARANATAKA STATE FINANCIAL CORPORATION. BANGALORE For further clarification/ details promoters may contact the General Manager (credits) or Asst. SCIENCE & COMMERCE.General manager (EG) at the head offices or the branch managers of the nearest branch offices.S.RAMAIAH COLLEGE OF ARTS. M.

♦ 402 are class A employees ♦ 721 are class B employees ♦ 143 are class C employees M.RAMAIAH COLLEGE OF ARTS.266 at the end of 31st March 2007 as against 1. which is headed by Senior Manager and coming under General Manager of Administration. The manpower strength of the Corporation stood at 1.281 at the end of 31st March 2006. out of them. BANGALORE STRUCTURE: The Human Resource Management Department called as Personnel Department.KARANATAKA STATE FINANCIAL CORPORATION.S. SCIENCE & COMMERCE. BANGLORE 45 .

and peons etc. Assistants. BANGALORE Class A employees consist of Executives.M. ♦ There are Officers Association. MTech.RAMAIAH COLLEGE OF ARTS. SCIENCE & COMMERCE. BE etc.B. Assistant General Manager. Class B employees consists of Assistant Managers. Stenographers. Class C employees consist of Drivers. Thus. M. ♦ There is a cordial relationship between the management and employees. ♦ In KSFC there are number of incentives given to the employees in the form of reimbursement of convenience & medical expenses and advances at concessional rates to employees such as house building advance.S. Senior Managers. which governs the conduct of the employees. Manager. SC/ST employees union and Employees union which reddress the grievances of the employees. ♦ There is also staff regulation and rules. Consumer durable advance. Deputy Manager. children education advance. LL.. MSc. MA. Typists and Clerks. MCom. etc. which governs the appointment of both direct recruitment and promotions. ICWAs. Motor car advance. RECRUITMENT AND INCENTIVES: ♦ There is a separate cadre recruitment rule.KARANATAKA STATE FINANCIAL CORPORATION. Directors. LL. Deputy General Manager. MBA. Daffedars. BANGLORE 46 . The Corporation have a unique combination of professionals on its pay rolls . the diversity in its human resource is one of the great assets of the corporation.C As.

SCIENCE & COMMERCE.S. BANGLORE 47 . ♦ In appraisal the employee’s overall performance is assessed for the fitness of his/her promotion.RAMAIAH COLLEGE OF ARTS. ♦ There is a reservation to SC/ST category for recruitment and promotion. ♦ The performance of the employees is to be assessed yearly. BANGALORE ♦ KSFC has also introduced various schemes for the employees like Voluntary Retirement Scheme (VRS) where employees can opt for retirement voluntarily. And separate confidential report of a particular employee will be obtained from the Section head/Department head. ♦ 8 in-house need based training programmes were conducted covering 221 employees during the year of 2006-07 ♦ 79 employees were deputed to external training programmes during the year of 200607.KARANATAKA STATE FINANCIAL CORPORATION. M.

cashbook and other books of accounts.KARANATAKA STATE FINANCIAL CORPORATION.S. SCIENCE & COMMERCE.RAMAIAH COLLEGE OF ARTS. The function of Treasury department is estimation of funds for lower possible cost. BANGALORE STRUCTURE: The Accounting and Financial Management includes Finance and accounts department. Treasury department and Legal department. The basic function of M. The Finance and Account department is responsible for maintaining various accounts. BANGLORE 48 . income tax filling of statutory returns and statements. ledger.

Further. 4. which is accrued and fallen due.RAMAIAH COLLEGE OF ARTS. The corporation has taken a policy under Group Gratuity Scheme with Life Insurance Corporation of India for payment of gratuity to its employees and premium there of has been charged to profit and loss account. SCIENCE & COMMERCE. 3. The corporation follows cash systems of accounting for recognition of income and expenditure. SIGNIFICANT ACCOUNTING POLICIES FOLLOWED BY KSFC 1. These departments are headed by one Executive Director.KARANATAKA STATE FINANCIAL CORPORATION. As required by IDBI wide circular dated 26th April 1994. BANGALORE Legal department is to appraise the project legally which the entrepreneurs submit for getting the loan. Senior Manager of Treasury and Assistant Manager of Legal. all expenses including interest. which is accounted on receipt of subvention money from government of Karnataka and charged off in the year of profit. M. 2. are effected in the books on the date of knowing their status 5. if any. BANGLORE 49 . Memorandum loan accounts are maintained on mercantile basis for the purpose of management information system and asset classification. Deputy General Manager of Controller. is accounted irrespective of its payment excepting for guaranteed dividend liability up to 19992000. Provisions against Non-Performing Assets have been made as per applicable guidelines issued by IDBI and SIDBI. Consequential changes.S. Cheques are accounted on receipt basis.

and in the other cases the income is accounted on actual receipt of deferred payment installment. thereafter to adjust interest dues and lastly the remaining amount towards repayment of principal.KARANATAKA STATE FINANCIAL CORPORATION.RAMAIAH COLLEGE OF ARTS. 8. Appropriation of amounts received on account on One Time Settlement is made on approval by the D.C/Board. if any. 11. The allocation logic adopted by the Corporation for repayment of loan made by the borrower is to first adjust towards other debits. SCIENCE & COMMERCE. The guidance note on “ accounting for lease” issued by the Institute of Chartered Accountants of India (ICAI) has been adopted in respect of assets on lease and the lease equalization/terminal adjustment is provided on the basis of schedule of lease rentals due over the period of lease transactions carried out up to 31-3-2001. towards interest due subsequent to 1983. Sale consideration on the sale of assets offered as security to the corporation on deferred payment bases is accounted in the year of sale where the borrower’s accounts were written off in earlier years. The income from bills discounting and DPG commission are accounted upfront. M. BANGALORE 6. In case of one time settlement and appropriation of sale proceeds of assets taken over under sec29 of the State Financial Corporation’s act 1951. BANGLORE 50 . 9. the allocation logic is to first adjust towards principal thereafter towards interest accounted under mercantile system till the year 1983.S. The corporation has own Provident Fund Regulations and contributions to the fund is accounted for. 10.R. 7. Accounting standard 19 issued by ICAI has been adopted I respect of assets given on lease and hire purchase after 01-04-2001. then towards other debits and lastly the balance.

RAMAIAH COLLEGE OF ARTS. BANGALORE 12. computers and motor cycles 04% 10% 15% 20% b) Fixed assets have been carried at historical cost less depreciation and include all lease assets acquire up to 31-03-2001. BANGLORE 51 . Furniture and Fixture 3.I circular dated 4th may 2001 effective from 31-03-2001 Investments are classified as “Available for sale” and provisioning for net depreciation in the value of investments is made.2001 is provided on straightline method over the primary period of lease. SCIENCE & COMMERCE. Building 2. In terms of R.03. c) Depreciation on all the leased assets upto 31. Motors cars.S. bicycles. a) Depreciation is provided on straight line method at the following rates:Depreciation Rate table: 1. Internal Telephone and Equipment 4.KARANATAKA STATE FINANCIAL CORPORATION. M.B. 13. Fans and Electrical Fittings.

50000/.KARANATAKA STATE FINANCIAL CORPORATION.200000 /.e.50 2.00 11.00 11. 01-08-2005 RELATING TO INCOME TAXage) AND SUPER INTEREST ( Rates in % SL NO Article I.50 1.00 10.TO SSIs .50 1.00 12.50 12. [INCLUDING TDMF & RTUF SCHEMES] AND RTO S a] General rate b] Under RSR c] NEF/MUN/SEMFEX [TL] .00 2.Others 14.25 (a) (b) LOAN ASSISTNCE FOR COMMERCIAL COMPLEX [not eligible under NEF/MUN/RSR scheme] II RATE OF INTEREST FOR OTHER CATEGORIES OF BORROWERS 1 Section I.50 12.200000/.50 lakhs & below] II RATE OF INTEREST FOR NON-SSI & MSI CATEGORIES 1 TERM LOAN TO NON-SSI s.50 11.00 1.50 13.50 12. CATEGORY OF BORROWERS EXISTING INTEREST NEW INTEREST RATE RATES [as per circular No. FINANCING EXISTING ASSETS AND ENTERPRISES etc.00 10.75 11. SCIENCE & COMMERCE.00 11.75 10.TO SSIs .00 1.00 13.50 1. 2 LOANS UNDER CORPORATE LOAN SCHEME LOANS UNDER CORPORATE LOAN SCHEME .25 10.50 13.50 12.50 12.00 14. MSIs & AMARA SCHEME a] General rate b] Under RSR c] NEF/MUN/SEMFEX [TL] – [ Excluding MSIs & Amara Scheme] 2 13.UP TO RS.f.50 12.00 0.50 12.50 13.00 12.00.00 13. [INCLUDING TDMF & RTUF SCHEMES] AND RTOS a] General rate b] Under RSR c] NEF/MUN /SEMFEX [TL] 2 TERM LOAN [INCLUDING WCTL] OVER RS.50 10.50 1.50 M.75 12.50 12.50 11.00 13. ED (F) 755] GROSS NET GROSS NET REBATE I RATE OF INTEREST FOR GENERAL CATEGORIES OF BORROWERS 1 TERM LOAN [INCLUDING WCTL] OVER RS.50 13.00 11.50 1.50 1.WCTL] OVER RS .25 10.00 13.25.TO SSI s.50 12. [INCLUDING TDMF & RTUF SCHEMES] AND RTOS a] General rate b] Under RSR c] NEF/MUN /SEMFEX [TL] 3 TERM LOAN [INCL.00 2.50 13.50 13.00 13.00.50 2.000/. BANGALORE PROVISIONSRATE TABLE [Term Loans] w.[for Project Cost Rs.50 12.00 10.00 11.00 12.50 12.50 12.50 13..50 12.00 13.50 1.2 LOANS SANCTIONED OUT OF CORPORATION'S OWN FUNDS SUCH AS BRIDGE LOAN AGAINST INVESTMENT SUBSIDY.00 12.00 13.25.00 12.75 12.00 12.S.50 12.25 9.75 10.AND UP TO RS.00 1.AAA rated entrepreneurs/units .50 11.25 11.00 10.50 13.75 9.000/. BANGLORE 52 .RAMAIAH COLLEGE OF ARTS.50 11.00 13.75 11.00 13.AA rated entrepreneurs/units .50 12.50 13.50 1.50 11.50 1.

cash flow estimates and projected balance sheet.KARANATAKA STATE FINANCIAL CORPORATION. They are inter-related and prepared on the basis of cost of the projects. BANGLORE . Provided further that in the case of any shareholders such portion of a dividend as has been paid out of any such sum advanced by the state government shall be deemed to be income from “interest on securities”.  Financial Appraisal :- The purpose of financial appraisal is to find out the financial viability of the project.RAMAIAH COLLEGE OF ARTS. (And the income tax shall be payable there on as if it were interest receivable on any security of a state government issued income tax free) within the meaning of Section 8 of that act. debt service coverage ratio. institutions will have certain ratios like debt-equity ratio. • FINANCIAL RESULTS: 53 M. profits and gains: Provided that any sum paid by the state government under the guarantee given in pursuance of (sec7 or sec8) shall not be treated as the income profits and gains of the financial corporation and any interest on debentures. The financial appraisal is to find out the finance the projects are concerned with the successful operation of unit. BANGALORE For the purposes of the Income Tax act. For this they should be convinced that the project generates enough cash surplus to meet all the contractual obligations.S. 1961(43 of 194) the financial corporation shall be deemed to be a company within the meaning of that act and shall be liable to Income Tax and super tax accordingly on its income. source of finance and various assumptions of profitability estimates. SCIENCE & COMMERCE. Further. Financial appraisal includes profitability estimates. etc against which they examine the project. (bonds or depreciation) paid by the financial corporation out of such sum shall not be treated as expenses incurred by it.

the corporation generated gross revenue of Rs.17.57 crore to 73 cases compared to the previous year’s sanctions of 100.8. • HEAD OFFICE SANCTIONS: AND BRANCH OFFICE During the year.KARANATAKA STATE FINANCIAL CORPORATION.56 crore in 2005-06.40 crore as on 31.78 crore and Rs.38 crore in respect of Hire purchase.195. Working of the corporation for the year resulted in an operating profit of Rs. • TREASURY ACTIVITY: Treasury department headed by Senior Manager and coming under Deputy General Manager of Controller.71 crore on cash basis as against Rs.96 crore to 1253 cases compared to Rs.1.39 crore as against Rs.555. 184.199. 239.S.21.1.2007.502. Cumulative disbursements reached Rs.03.06 crore made in the previous year.RAMAIAH COLLEGE OF ARTS. loan sanctioned by the head office amounted to Rs.32 crore as against operating profit of Rs. 215. Recovery in respect of loan was Rs. SCIENCE & COMMERCE. • RECOVERY: The total recovery during the year stood at Rs. M.16 crore in 2005-06. BANGALORE During the year under review.74 crore as compared to Rs. • DISBURSEMENTS: Disbursements made during the year touched Rs.48 crore in respect of Leasing and Rs. BANGLORE 54 .6526. Rs.478.10 crore in respect of financial services.310.86 crore disbursed during the year 2005-06.93 crore to 1096 cases in the previous year.210.27 crore to 65 cases. Loans sanctioned by the branch offices amounted to Rs.

2006 came down to Rs 875..212. During the year under report utilization of Rs. 427.00 crore. The AR department also contributed amount of Rs. The interest cost on account of bonds reduced from 67. • ASSET RECONSTRUCTION: The Asset reconstruction department at Head Office continued to tackle the chronic Non-Performing Assets.73 crore for the year 2005-06 to Rs.49 crore for the year 2006-07.78. execution of decrees. The recovery from MR portfolio was Rs. BANGALORE While the year 2005-06 was considered as a milestone year in restructuring high cost bond obligations of the Corporation. M. fixed deposit holders and all other financiers. which also contributed to the income of the Corporation.937. follow up of miscellaneous cases filed against guarantors for decree.68 crore at crore from SIDBI. of being prompt in meeting all its payment obligations i.55 crore for the year 2006-07. assets of 30 units were sold involving a sale price of Rs.00 lakh.e. 242. SCIENCE & COMMERCE.73 lakh.KARANATAKA STATE FINANCIAL CORPORATION. The line of credit out standing of SIDBI. 150.29. including a pre-payment of Rs 100.S. The corporation availed a rebate of Rs.RAMAIAH COLLEGE OF ARTS. 300.00 lakh. the bondholders.2007. since inception. while repaid the principal of amount Rs. recovery of dues from MR portfolio etc.00 crore.2. to the SIDBI. The Corporation maintained its track record.03.00 crore to SIDBI.69 crore as on 31. During the year. The interest cost on account of line of credit also came down from Rs. for the prompt payment of principal and interest installments. which was at Rs. The action basically involved disposal of units under sec.10 crore for the year 2005-06 to Rs.150. During the year corporation availed a refinance of Rs. 925. One time settlement of dues was extended to 16 units involving a settlement amount of Rs.57. BANGLORE 55 .00 lakh of interest recovery.00 crore private placement bond proceeds was completed for swapping the earlier high cost bonds.

10 7816. 3.11 203053. Particulars N o A Capital 1.77 12467.RAMAIAH COLLEGE OF ARTS.07 60091.55 917. 4.16 60315.lakhs ) Sl.07 369.86 106924.83 12434.87 456. Liabilities: Schedul e and As on As on 31-03-2007 31-03-2006 Share capital Loan pending conversation To Share capital Reserve fund and other resources Term borrowings Current liabilities and provisions A B C D E 12467.91 105790. 5.24 11563.21 14741.55 917.43 821. L Property Assets: TOTA and F G H I J 186612. SCIENCE & COMMERCE. 2.09 Cash and bank balances Investments (at cost) Loans and advances Fixed assets Current assets Profit and loss accounts 4817.85 22970.02 B 1. 5.61 748.S. 3.KARANATAKA STATE FINANCIAL CORPORATION.92 M. BANGALORE BALANCE SHEET AS ON 31 st MARCH 2006-07 (Rs.69 425. 6.69 425.00 164985. 4. 2.in.00 17808. BANGLORE 56 .

72 355.KARANATAKA STATE FINANCIAL CORPORATION.57 155.66 2856.81 18231.S.84 1339. 2007 (Rs. BANGALORE balance AL TOT 186612.09 PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31stMARCH.70 2849.00 EXPENDITURE: Interest and Other Financial Expenses Personal Expenses Administrative expenses Depreciation Bad Debt Written Off Profit Before Tax Less: provision for fringe Benefit Tax Current year Previous year M N O I TOTAL M.in lakhs) Particulars Schedule As at 31-03-2007 As at 31-03-2006 INCOME: Interest income Other income K L TOTAL 16721.62 2581.06 16780.56 _ 41.22 174.11 203053.81 20450.89 80.87 3621.76 827.89 565.00 3.19 17394. BANGLORE 57 .19 21016.40 14110. SCIENCE & COMMERCE.70 19571.17 39.RAMAIAH COLLEGE OF ARTS.67 758.

39 1.7 1 8.20 165. Number b.S.79 240.24 4 242.8 4 1.526.00 199.24 P 526.58.2 8 97.17 526.17 -60315.2007 97.030 1.8 4 1.37 247.03.86 1.32 6 424.34 1.64 -60315.168.92 OPERATIONS AT A GLANCE: (Amount Rs.92 -60091.342.37 6.8 3 97.16 1 316.RAMAIAH COLLEGE OF ARTS. SCIENCE & COMMERCE.53 178. in crore) Particulars Paid up capital at the year end Gross Sanctions: a. BANGLORE .05 823.53 310.40 58 - M. BANGALORE Profit after Tax Less: Adjusted towards Dividend deficit Account Dividend provision Less: brought forward loss from Previous Year Surplus/Deficit carried to Balance Sheet Notes &Significant Accounting Policies forming part of Accounts 1295.8 4 1.38 4.320. Amount Assistance to SSIs Disbursements Loan out standings Recoveries Percentage of NPA Income Since 2004-05 2005-06 2006-07 inception up to 31.87 131.92 -60315.KARANATAKA STATE FINANCIAL CORPORATION.504.286.

S.95 217.16 204.32 - M. SCIENCE & COMMERCE.RAMAIAH COLLEGE OF ARTS.16 7.KARANATAKA STATE FINANCIAL CORPORATION. BANGLORE 59 .74 33 195.56 502.06 46 210.17 51 217. BANGALORE Expenditure Operating Profit 582.31 17.76 555.71 182.50 8.

MANAGEMENT INFORMATION SYSTEMS (MIS) The present reporting system is oriented primarily to statistics .S. M. BANGLORE 60 . disbursement recoveries and costs is necessary for monitoring of performance by top management.RAMAIAH COLLEGE OF ARTS.A formal MIS covering profitability. BANGALORE STRUCTURE: The Management Information System Department is headed by Assistant General Manager and coming under General Manager of Corporate Planning. We suggest the following regular reports as parts of MIS for top management. SCIENCE & COMMERCE.KARANATAKA STATE FINANCIAL CORPORATION. liquidity.

refinance. 4. interest and experience. This can be easily extracted from the database if it forms part of the original files on assisted units. it is better to as on the side of caution rather than assisted units functioning in leased premises. LIQUITIDTY:• • Eligible refinance for disbursement already made—weekly. INTEREST ON LOANS. Recovery analysis-quarterly. 2.S. ABC analysis of arrears (To cover 75% of the arrears of interest and principal). PORT FOLIO ANALYSIS: • • • • • • Distribution of loans by size – quarterly. Loan size wise arrears analysis-quarterly. recoveries. reimbursements. PROFITABILITY:• Segment wise profitability (quarterly) • Branches wise profitability(half yearly) 3.KARANATAKA STATE FINANCIAL CORPORATION.QUARTERLY: 6. BANGALORE 1. Variance analysis of cash flow (month) actual v/s budget. SANCTIONED QUARTERLY: LOANS AWAITING DISBURSEMENT – In the design of a computerized system of accounting and statistics collection using concepts such as those of relation database. In this. Extreme care is necessary describe loans given/taken as comprehensively as possible. The M.RAMAIAH COLLEGE OF ARTS. Branch wise analysis of recovery and arrears. Age wise analysis of area’s-quarterly. BANGLORE 61 .COST OF BORROWING –QUARTERLY: 5. SCIENCE & COMMERCE.

government departments. and interest recovery. BANGLORE 62 . disbursement recovery. SCIENCE & COMMERCE.KARANATAKA STATE FINANCIAL CORPORATION. In turn the MIS department collects information from these zonal offices. MIS department prepares the annual corporate budget M. FUNCTIONS OF MIS IN KSFC:• MIS generates weekly. But the inclusion of all possible information when building a file enables collation of data and reporting in complex cross— classification and matrices at any time of future. half yearly etc. monthly reports and submits it to the management for taking appropriate policy decisions for follow up of branches/operational departments. MIS department prepares operational statistics every year. MIS department helps in fixation of targets. • • • • • • MIS department furnishes information to its board of directors at monthly intervals. financial department etc. MIS department furnishes information to SIDBI.RAMAIAH COLLEGE OF ARTS.S. MIS department organizes branch zonal managers meeting every quarterly. BANGALORE relevance of all the data/information available on an assisted unit may not always be apparent at the time of data collection /entry. industry and commerce. performance of all 29 branches are given to the zonal offices later. • The information regarding sanctions.

BANGALORE STRUCURE: This department has started from this year. BANGLORE 63 . fee based activities like stamp vending.RAMAIAH COLLEGE OF ARTS. In order to augment income generation.KARANATAKA STATE FINANCIAL CORPORATION. marketing of Life and General Insurance products. the corporation initiated several measures directed towards fee-based activities. marketing of UTI mutual fund products. M. As part of restructuring. etc have been taken up by this department.S. This department is headed by Deputy General Manager and which comes under Executive Director of Finance. SCIENCE & COMMERCE.

S. ♦ Sky Top Builders Private Ltd ♦ Akka Mahadevi Agro Foods Private Ltd 64 M. 166. BANGALORE MARKETING ACTIVITIES OF KSFC: ♦ MUTUAL FUND ACTIVITIES: During the year of 2006-07 the Corporation entered into MoU (Memorandum of Understanding) with UTI for marketing of its Mutual Fund products of UTI. ♦ STAMP VENDING ACTIVITY: The Corporation has submitted a proposal to the State Government seeking permission for taking up the Stamp Vending activity.39 lakh.00 lakhs. SCIENCE & COMMERCE.49 lakh were marketed.RAMAIAH COLLEGE OF ARTS. Though this activity was started in the last quarter of 2006-07.KARANATAKA STATE FINANCIAL CORPORATION. CUSTOMERS OF KSFC: ♦ News line printers Private Ltd ♦ Reliance Engineers Ltd. BANGLORE . ♦ MONITORING OF IPOs: During the year. the Corporation took up the Issue Monitoring (Initial Public Offerings) assignments in respect of two companies and earned a revenue of Rs. The proposal is pending with the Government. 138.831 cases and mobilized a premium of Rs. ♦ INSURANCE BUSINESS: An MoU was signed with Life Insurance Corporation of India in March 2007 for marketing of LIC products. 40. The Corporation insured assets in respect of 4. mutual fund products of Rs.

BANGLORE 65 .KARANATAKA STATE FINANCIAL CORPORATION. M.RAMAIAH COLLEGE OF ARTS. BANGALORE ♦ Jai Auto Cables Private Ltd ♦ Ajantha Computarised Colour lab ♦ Anand Bhavan Properties Private Ltd ♦ Chandra Plaze ♦ Deepthi Electronics and Electro Optics Private Ltd ♦ Balaji Warehousing company Private Ltd ♦ Dev Kiran Paper Mills Private Ltd ♦ Diamond Plastics ♦ Arun Digi Audio ♦ Bharani Laboratories Private Ltd ♦ Captronics Private Ltd . SCIENCE & COMMERCE.S.

66 M. Network touching the whole of Karnataka. BANGLORE .RAMAIAH COLLEGE OF ARTS. Internal strength in financing small sectors.KARANATAKA STATE FINANCIAL CORPORATION.S. BANGALORE STRENGTHS OF KSFC: • • • • Well qualified employees. SCIENCE & COMMERCE. Well laid down policies and procedures.

M.RAMAIAH COLLEGE OF ARTS. Company’s image. A statutory corporation with lots of government control. BANGALORE • • • • • • • Operating and surviving in a highly industrialized state. Flexible repayment period. ability to respond to changing conditions are strengthen their vision which influenced more on their performance level at higher rate. The corporation is heavily dependence on outsider’s funds. Company’s leadership. BANGLORE 67 .KARANATAKA STATE FINANCIAL CORPORATION. flexibility and adaptability of changes in the work. OPPORTUNITIES OF KSFC: • Infrastructural development is what the companies are asking can be financed to large extent.. reputation.S. Attractive schemes. No flexibility in interest rates / promoter’s margin / security norms. The corporation has highly motivated employees. quality of service. WEAKNESS OF KSFC: • • • • • • The corporation is not adopting harsh recovery measures and helping the clients during their difficult periods due to continued economic recession. dedication and skill of workers. entrepreneurial orientation. when compared to delegation given to Commercial Banks. All financial services under one roof i.e. Could not raise resources at low cost in the open market Net worth and borrowing powers are affected adversely. information availability is the key to success in their performance level. availability. SCIENCE & COMMERCE.

Per capita income. SCIENCE & COMMERCE. FINDINGS AND SUGGESTION: M. • IDBI. HDFC are aggressive in financing loans by reducing their processing time in their corporate financing.S. business can be given importance and financed. THREATS OF KSFC: • Private Banks like ICICI. Regulation in the competitive practices. the rate of growth of economy also provides an opportunity to extend the financial assistance at an increasing trend. SIDBI. BANGLORE 68 . If implement dedicated connectivity between all their branches which can reduce the processing time and increase their customer base. Number of competitors is some what less which is an opportunity to increase the performance level. provides an opportunities to innovate new products and services to serve them. Corporative banks are gearing up for term loan finance to SME’s. Buzz word.KARANATAKA STATE FINANCIAL CORPORATION. level of education. Government controls and legislation regulating business also an opportunity to improve the business. Growing population their lifestyle trends. BANGALORE • • • • • • Knowledge Process Outsourcing (KPO).RAMAIAH COLLEGE OF ARTS.

BANGALORE ♦ FINDINGS:1) All the schemes that can be availed by the local entrepreneur are operated at branch level. then his credit M. If the borrower is a regular customer. 2) Prior to providing assistance to a new unit an intensive study is done on the technical feasibility and financial liability of the proposed project by appropriate expertise in the field.KARANATAKA STATE FINANCIAL CORPORATION. Apart from this cash generation capacity of the proposed project is considered to fix up actual repayment period. 7) In case of defaults in repayment of loan. 3) The need for a guarantor/security for sanctioning a loan depends on the the proposed project. If the proposed project involves high risk and worthiness becomes vital.S. • First. SCIENCE & COMMERCE. and supervise/monitor the progress of a project and follows up of loans. BANGLORE 69 . 4) KSFC has norms to decide the repayment period for a loan. reminder letters are sent to the defaulting customer requesting him/her to make the payment. KSFC follows the following steps to recover. nature of then the need for security also increases. But this depends upon the exiting loan transactions with the corporation. 5) KSFC provides guidance to the borrowers. 6) A Borrower can avail loans under more than one scheme and can take additional loan before repaying the previous loan.RAMAIAH COLLEGE OF ARTS.

relationship with bankers etc.S. • Suppressions of material information about experience. In some rare cases they period taken has been up to 6 months. M. The amount that is not realizable will be written off finally after exhausting all the available remedies under the law. But the respondents have revealed that. SCIENCE & COMMERCE. If none of the above methods prove to be fruitful then the security provided by the borrower will be confiscated and the amount realized from that will be setoff against the amount due from him. 2) The officers in charge of appraisal are found to face certain problems while discharging their functions. • Over-invoicing of the cost of plant and the machineries. Then a compromising process will be carried on for arriving at an agreeable solution between the defaulting borrower and KSFC. woman family members to get subsidy..RAMAIAH COLLEGE OF ARTS. 1) Normally. the lead-time between application of loans and sanctioning of loans is up to proposal received by the branch having been processed within a period of 3 months. Show cause notices are sent to the defaulting customer stating the consequences of non-payment. BANGLORE 70 . • Diversions and miss-utilizations of Funds. some of which are listed below:• Lack of information about the net worth. • Extraneous pressure for sanction of assistance. • Inclusion of persons with dubious reputation. • Genuineness of the legal documents. past track record. • Change in government policies. the delay was on account of their inability to comply with the formalities and provide required documents. dummy names. BANGALORE • • • In case of failure to get the response.KARANATAKA STATE FINANCIAL CORPORATION.

and marketability of the product while sanctioning the financial assistance to the project. KSFC has to take steps to provide additional financial schemes concentrating more on the small-scale industries sector. Through investigation into the applicant’s profile and confirmation of facts and claims. KSFC has been taking a number of strategies:• • • • • Constant review and up-gradation of systems and practices.KARANATAKA STATE FINANCIAL CORPORATION. the following point is put forward for the effective working of various loan schemes and project appraisal followed. banks and financial institutions. Periodical interaction with applicant’s bankers. ♦SUGGETIONS: On the basis of analysis and interpretation of data and finding. The corporation should take measures to sanction financial assistance by taking less processing time to give better services and to retain good cliental base.S. SCIENCE & COMMERCE. M. 1) KSFC plays an important role in the development of small-scale industries in Karnataka State. financial analysis. 2) KSFC has to maintain quality clients so that it can maintain quality portfolio. 3) The appraisal department has to consider more parameters in the Area of technical analysis. BANGALORE 3) To over come the above problems and appraise the proposals effectively. Objective analysis of different elements of the project.RAMAIAH COLLEGE OF ARTS. BANGLORE 71 . Close co-ordination with allied Government agencies.

BANGALORE 4) KSFC has to keep continues contact with the clients. The corporation has to conduct meetings with the clients and try to solve the problems faced by the unit frequently. so that the overhead expenses should be reduced. 7) KSFC should conduct “customer meeting” once in every month and should discuss the actual problems faced by the unit.S. 11) A higher target could be attempted for achievement in respect of all schemes. which will help the clients. 5) The corporation should concentrate on recovery of over dues and bad debts so as to bring down the loan outstanding of the corporation. This will attract new customers to KSFC. 72 M. The corporation with the help of its expert team should solve the problem and this will ensure smooth functioning of the assisted unit and recovery of the loan will also be ensured. 10) Frequent policy reviews regarding quantum of loan and terms of repayment could be in tune with the change in the economy and recessionary trend in the industry. SCIENCE & COMMERCE. 8) The concentration of SSI units in and around Bangalore is more. 9) The organization structure should be modified and surplus staff should be removed and should implement fully computerization. 6) Targets should be set to the recovery officers and special incentives should be provided to those officers who achieve their objective.KARANATAKA STATE FINANCIAL CORPORATION. BANGLORE . Most of them are proprietary concerns and private limited companies. This will benefit more people and Institution.RAMAIAH COLLEGE OF ARTS. which will help the corporation in quick disbursement and improves customer relationship. So KSFC has to add new schemes for providing financial assistance to SSI units by charging lesser rate of interest.

financial sector reforms coupled with WTO provisions and declining interest rate regime has had adverse effect on KSFC’s functioning particularly during 1999 to 2002 years. But the changing economic scenario. Both internal and external factors and market competition offered particularly by the banking sector have worsened the position of KSFC during the said period.RAMAIAH COLLEGE OF ARTS. Further KSFC is also entering into marketing fee based activities such as insurance products. BANGALORE CONCLUSION : KSFC is the largest state owned term lending institution in Karnataka. SCIENCE & COMMERCE. BANGLORE 73 . it is observed that KSFC is a very good financial institution that has different branches all over Karnataka with helping hand to the needy small-scale entrepreneurs.S. infrastructure development activities and other emerging fields where the financial assistance is needed. mutual funds.KARANATAKA STATE FINANCIAL CORPORATION. To conclude. M.

C. BANGALORE BIBLIOGRAPHY:  ORGANIZATIONAL BEHAVIOR  FINANCIAL MANAGEMENT  NON-BANKING FINANCIAL COMPANIES Company’s Reports:        KSFC Circulars.M.financeindia. KSFC Manual Report. Project Appraisal Manual.Verma Websites:  WWW. BANGLORE 74 .S. J.nic. SCIENCE & COMMERCE.kar.RAMAIAH COLLEGE OF ARTS.KARANATAKA STATE FINANCIAL CORPORATION.in  WWW.Pandey -Dr.google.ksfc.com  www. -Stephen Robbins -I.org M. Annual Report of KSFC 2006-07 Operation Statistics 2006-07 Auditors Report. KSFC Director’s Report.


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